PEM VAT update - March 2024.

Article | Sarah Davis | 5th March 2024

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In every update, our VAT team brings you a brief summary of news from the world of VAT. This month we focus on items which will be of interest to anyone who…

Undertakes activities in other countries

The Advocate General (AG) has issued an opinion in the case of SC Adient & Co which considers whether a business has sufficient human and technical resources in a country to constitute a fixed establishment. This is an important concept for VAT as it can determine the place of supply of a transaction and therefore whether or not VAT is chargeable by the seller. In this case, a German company buys materials which it has delivered to a sister Romanian company for manufacturing and processing to then deliver on to the final customer at the request of the German company. The Romanian tax authority argued that the services of the Romanian company created a fixed establishment for the German company. The AG disagrees.

Man unloading boxes in a warehouse

Is appealing a decision from HMRC

Aesthetic Doctor Limited is the latest in a series of cases involving the VAT liability of cosmetic medical treatments. HMRC had retrospectively registered the business back to 2010 with an output tax liability of £1.6m. The company argued that its procedures fell within the health exemption but failed to convince the Tribunal that it was diagnosing or treating diseases or health disorders. As with many of the previous cases on this issue, the appellant failed to provide appropriate evidence to back up its claims. This case serves as a reminder of the importance of providing documentary evidence at the First tier Tribunal.

Exports goods

H Ripely & Co Limited has lost its appeal against HMRC’s refusal to allow the zero rating of scrap metal that it exported to Belgium. HMRC considered that the taxpayer had failed to keep appropriate evidence of export as it sought to rely on boarding passes. In a reminder of the importance of keeping appropriate documentation, the Tribunal found the passes to be inconclusive and dismissed the appeal.

Man inspecting shipping containers

May need to register for VAT

It had previously been announced that the VAT registration and deregistration thresholds would remain frozen at their present levels of £85,000 and £83,000 until 31 March 2026. However, In the first change in the thresholds since April 2017, the Chancellor announced in the Budget that the thresholds would increase to £90,000 and £88,000 respectively, to take effect from 1 April 2024.

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This article was correct at time of publication.

About the author

Sarah Davis

Sarah is a Director in our VAT team. She is responsible for providing VAT & stamp duty land tax (SDLT) advice.